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KCAEP, LLC a holding company formed by KCA Partners that consists of three operating subsidiaries: Apex Medical Corporation, a manufacturer of low-tech, self-care medical products; KCA Foods, a majority owner of Van's International Foods (www.vansintl.com), a manufacturer of gourmet frozen waffles; and KCA Engineered Plastics, the sole owner of US Thermoplastics, a manufacturer of molded plastic parts.
Originally, KCA Partners owned each company individually, without a holding company structure, and each company was financed on a standalone basis. The incumbent lender decided to exit this segment of the cash flow lending market and wished to be refinanced out of its positions. However, KCA Partners was having difficulty finding a new financial partner who would provide financing to each of the three companies.
Caltius determined that the whole was greater than the sum of its parts. By combining the cash flows of the three operating entities, a higher amount of leverage could be supported. Caltius worked with KCA Partners to create a holding company structure that contained all three of the operating entities.
Caltius made a $14.5 million loan to the new holding company that was supported by intercompany notes between each of the three operating entities and the holding company. As a result, KCA Partners successfully refinanced its existing lender and had a more flexible financial structure to support its plans for growth and acquisitions. In May 2006, Caltius' notes were redeemed as part of a recapitalization in conjunction with an acquisition. Caltius continues to own its equity interest in the company.
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